Rent Reviews – From a Landlords perspective
Rent reviews are one of the many reasons a property can be valued and are essential when negotiating terms of business with a partner, landlord or tenant. At JS Reakes we provide Professional guidance to determine correct levels of rent and how best to approach negotiations.
1. Communicate with the tenant about the rent review at least 3 months before the review date.
2. Explain the process and the rent review provision in the lease.
3. Provide as much supporting evidence:
- The best evidence is new lettings of similar properties as close to yours as possible
- Talk with the owners of adjoining properties regarding recent lettings and or rent reviews
- You then break down the rent/per square foot and apply it to your property
- It is best to measure your property but if you don’t have that option the measurements are listed in the VOA business rates
- Local agents will have access to large data bases with supporting evidence
4. If there is a large difference of opinion between your asking rent and the rent the tenant is willing to accept. Get a professional valuation/view. This is to save time, money and may save the relationship between you and your tenant.
If you can’t agree…
5. If you can come to no agreement the lease will set out the next stages and will most likely be either:
- Independent Expert (IE) – decision made by an independent expert using their knowledge of the market and evidence available.
- Arbitration – decision made by an appointed Arbitrator based on the strength of the arguments put forward by each party only.
6. A local RICS Registered Valuer should represent you in either case to enable you to put the best case forward. Both the IE and Arbitrator will ask for supporting evidence and a valuation report. Both you and your tenant will have to provide this to them.
7. During this process there are a number of other tactics available including serving a Calderbank offer (a without prejudice offer to settle) to protect you against costs. This has a number of permutations too many to list in this blog and should be used with care.
8. Once the rent has been agreed it should be documented with a signed and dated rent review memorandum setting out details of the original lease and parties to the lease. This needs to be signed and dated by both parties.
9. Rent is then payable backdated to the rent review date.
The worst thing to do is nothing or to impose a new rent on the tenant without any supporting evidence. If you would like some further advice please get in touch.
We wrote this advice for Landlords. Our advice to tenants would be entirely different and will be in our next monthly blog. For more articles like this, go to our Articles page and also consider signing up to our Newsletter!